Financial rules and procedures in Interreg Europe - second call projects

European Union European Regional Development Fund Sharing solutions for better regional policies Financial rules and procedures in Interreg Europe - second call projects Aleksandra Niechajowicz Finance Officer Interreg Europe joint secretariat Madrid, 14 June 2017

CONTENT 1. Financial reporting and first level control 2. The iolf reporting system 3. Eligibility rules 4. Points of attention 2

1. FINANCIAL REPORTING AND FIRST LEVEL CONTROL 3

Reporting deadlines and procedures Reporting periods are set by call subject to the monitoring committee (MC) s approval 2nd call MC s approval 5 October 2016 Reporting period Deadline for submission Phase 1 (e.g.36 months) six-monthly 01 Jan 30 June 01 July 31 Dec 01 October 01 April Phase 2 (24 months) annual* 01 Jan 31 Dec 01 April (first year) 31 Dec (second year) * six-monthly reporting under certain conditions (eg. decommitment risk, high amounts due to pilots) 4

Preliminary steps During the first reporting period project partners:. have signed the project partnership agreement ONLY partners who signed the project partnership agreement can report costs! 5

Preliminary steps During the first reporting period :. Spanish project partners propose their FLCs to Ministerio de Hacienda y Función Pública. Ministerio de Hacienda y Función Pública designates the FLCs through iolf Ready for the reporting procedures! 6

Main steps 1 2 Project partners send their reports incl. list of expenditure and list of contracts to their FLCs through iolf The FLCs verify and confirm the eligibility of the expenditure reported by the respective project partners in iolf 3 The lead partner consolidates and submits the joint progress report to the JS 7

Main steps PPs fill the partner reports and submit them to their FLCs through iolf 8

The partner report includes: PP s activity report The list of expenditure The list of contracts 9

The partner s activity report Activities summary tab of the partner report not included in the joint progress report 10

The partner s activity report Goal = to provide information to the FLC on the activities carried out Can be filled in Spanish Not compulsory to use = information can be provided outside the system 11

The list of expenditure (LoE) VM15 12

Diapositiva 12 VM15 New screenshot of loe without the financial correction shhet Virginia Moscadelli; 06/06/2017

The list of expenditure Costs incurred and paid by the partner in the reporting period For PR1: eligible from 5 October 2016 until 30 June 2017 (no costs paid out after!) 13

The list of expenditure Descriptions in the list of expenditure: self-explanatory clear link with reported activities/outputs planned in AF 14

The list of expenditure Why so important? Finances have to match the activities Costs in PR reported against expenditure planned in AF Expenditure in list of expenditure coherent with reported activities + costs planned in AF! 15

The list of contracts (LoC) Listing all contracts used for the implementation of the project (above & below EU thresholds)

The list of contracts (LoC) For costs related to travel and accommodation, external expertise and equipment Only contracts above EU thresholds should be transferred to the joint progress report. To transfer a contract into the joint PR, just tick the box above EU threshold

What to include in the LoC? Classical contracts Any written contractual agreement e.g. confirmation emails or purchase orders. 18

What you should not include in the LoC? One-off purchases Oral agreements since not documented 19

Main steps 2 A FLCs check the expenditure and fill the control report including checklist in iolf Partner reports certified! 20

Main steps 2 B The Validation Body validates the FLC certificate in iolf Partner reports certified! 21

Main steps PPs send their certified partner reports to the LP through iolf. The partner report includes: First level control certificate Control report including checklist Certified list of expenditure including the list of contracts PP s activity report 22

Main steps 4 The LP consolidates the partner reports in the joint progress report (PR) in iolf No longer special role for the lead partner s controller! 23

4 Main steps The LP consolidates the partner reports in the joint progress report, checking that the reporting complies with the minimum requirements : the expenditure is related to the project and corresponds to the activities in the application form the partner expenditure certified by a controller is in line with national control requirements (first level control certificate) 24

4 Main steps BUT in case of doubts - LP asks for clarifications from PPs and can: undertake minor changes (eg. no change in amount) send back the partner report (new FLC certification) PP + FLC always informed! 25

Main steps 5 LP submits the joint PR to the JS within three months after the end of reporting period 1 October 2017 for the first reporting period 26

Main steps 6 Clarification and/or approval of the joint PR The LP answers to JS s clarification requests PPs should be cooperative and provide input if needed 27

Main steps 7 Execution of payment by the certifying authority 28

Main steps 8 The LP transfers the programme funding to PPs in compliance with the amounts stated in the PR 29

Reporting deadlines and procedures How to make sure to have a sound financial reporting in place and to be able to report costs in full and in time by 1 October 2017? 30

Work with internal deadlines 31

PPs reporting to their FLC. PPs submit their partner report to the FLC shortly after the end of a reporting period PPs reporting to lead partner. Ensure LP has sufficient time to compile the PR and submit it on time 32

References Read the programme manual Section 6.2 Reporting Section 7 Financial management 33

Time for questions 34

2. THE IOLF REPORTING SYSTEM 35

Two interlinked systems Interreg Europe data base Interreg Europe online forms idb Joint secretariat Managing authority Certifying authority Partner states* Approbation bodies* iolf Lead partners Project partners First level controllers Validation bodies (ES & PT) Approbation bodies *statistics 36

Reporting fully online Reporting fully online in the iolf system! (no more paper documents) Partner reports (incl. list of expenditure and list of contracts) FLC designation (no longer paper designation certificates) FLC certification (incl. the first level control certificate, the control report incl. checklist, and the financial correction sheet, if applicable) Joint progress report 37

Reporting fully online PPs need access to iolf LP creates only the access for PPs 38

Reporting fully online FLCs need access to iolf Ministerio de Hacienda y Función Pública: - creates FLC accounts in iolf activation of accounts by FLCs - assigns FLCs to their PPs in iolf activation of assignments by FLCs 39

Reporting system - iolf http://iolf.eu/account/login?returnurl=%2f 40

PROJECT PARTNERS DASHBOARD 41

Project dashboard for PPs 42

Project History Application form Joint progress reports PR clarifications 43

Project contact details The only place where you edit the contact details 44

Partner contact details The only place where contact details are edited Contact details can be changed by PPs & LP 45

Updating partner contact details Remember to submit! 46

Partner reports All your partner reports are visible here 47

Partner reports Each partner can see only their own reports LP notified by email when a partner submits report to FLC 48

Project users Only the LP can add new users to the project 49

Project users All partners can see all users (no FLCs listed here) Only the LP can add or remove users 50

PARTNER REPORT 51

Summary Indicate the correct reporting period impossible to change it later on 52

Activities summary Information for FLC It can be filled in Spanish 53

Contact details Select the current version of contact details New version of contact details can be created in the dashboard from the Partner contact details section 54

List of contracts Listing all contracts used for the implementation of the project (above & below EU thresholds) Listed contracts will reappear in next partner reports automatically 55

Expenditure Example budget line (1/3) Link the T&A, external expertise and equipment expenditure with contracts listed in the list of contracts Link the external expertise and equipment expenditure with the relevant item planned in AF, section E.2 56

Expenditure Example budget line (2/3) Exchange rate automatically calculated by the system (= exchange rate valid on the date of submission to the FLC) 57

Expenditure Example budget line (3/3) In the certified report, the Total amount certified by FLC will be visible 58

External expertise and services Individual items from the List of expenditure, listed in the External expertise budget line, are here merged into one item per indicated AF item. Same for equipment. 59

Submit partner report 60

Help Info bubbles Check button Error messages Video tutorials: https://www.interregeurope.eu/projects/guidance/#reporting https://www.interregeurope.eu/projects/guidance/#flc-guidance 61

FLC DASHBOARD 62

Log in To access your projects To update contact details: + New Version and + Submit 63

My projects List of projects the FLC is assigned to Click on a row to access the project 64

Project dashboard for FLCs All reports of the partner that have been submitted to the FLC will be visible here 65

PARTNER REPORT FLC VIEW 66

Partner report FLC view 67

Activities summary 68

Contact details 69

List of contracts 70

List of expenditure 71

FLC checklist Downloadable If No or N/A selected comment obligatory 72

FLC report Downloadable 73

Certify report step 1 Click Certify report 74

Certify report step 2 Click the link received in the email [Partner name] [Project acronym] 75

Help Info bubbles Check button Error messages Video tutorials: https://www.interregeurope.eu/projects/guidance/#reporting https://www.interregeurope.eu/projects/guidance/#flc-guidance 76

JOINT PROGRESS REPORT 77

Partner report consolidation 78

Partner report consolidation LP can see all reports submitted by PPs after certification All editing of partner reports is done in this section 79

Partner report consolidation What can the LP do in the partner report consolidation module? 1. Minor changes = the amount does not change 2. Reject = sends report back to partner new certification 3. Set ready for inclusion = blocks for editing before including in PR 80

Partner report consolidation Minor changes = the amount does not change, for instance: wrong budget line (except staff), incomplete item description, justification not sufficient, old contact details... LP can correct the budget line, as long as it doesn t have impact on the amount certified by the FLC 81

Partner report consolidation Prepare description of EE and equipment items for the joint PR 82

Joint PR Partner reports List of partner reports Include = partner report data transferred to the joint PR Exclude = partner report data taken out from the joint PR Notifications sent to partner each time 83

Conclusions looking at PARTNER REPORTS & PR1 Online in the iolf: all reporting Offline: Sending of supporting documents (invoice, payment proofs, procurement documents) to FLC 84

Time for questions 85

3. ELIGIBILITY RULES 86

General principles Different levels of rules European: EU regulations Programme National Partner/institutional

General principles Eligibility of costs is determined by the relevance of the activities! Costs necessary to Carry out the project activities Achieve the project objectives

General principles CONSISTENT allocate the expenditure to the right budget line JUSTIFIED unforeseen expenditure items or over/underspend needs to be justified COHERENT reported activities and finances have to match

Eligibility period Eligibility period from 5/10/2016 (approval by monitoring committee) to project end date Submission date of last report = project end date = end date of eligibility of costs Expenditure can be reported only if paid before the end of the reporting period Paid = debited from partner s institution bank account

Preparation costs lump sum of EUR 15,000 per project attributed to the lead partner Covers costs linked to the preparation of the application Added only to the reported lead partner s expenditure in PR1 Distribution among partners regulated internally by project partnership agreement only lead partner reports to the programme! No supporting evidence required!

Budget lines Staff Administration costs Travel and accommodation Equipment Only for staff directly employed by the partner organisations External expertise and services

Staff costs (principles) For partner staff only (employment contract) Not for staff employed by other bodies even if 100% owned by partner seconded to partner they are members (of association, umbrella organisation) if seated in partner organisation Programme manual section 7.2.1 & Delegated Regulation (EU) 481/2014, Article 3

Staff costs (calculation) What does your contract say? A. full-time on project? > Real cost charged B. fixed % on project? > % of real cost charged Contract C. flexible hours on project? > C.1 - monthly salary / contractual hours or > C.2 - annual salary / 1,720 hours D. hours + hourly rate fixed in contract?

A. + B. Full-time / fixed % Calculation: Employment cost * % Points of attention:. Regular review (e.g. annual staff appraisal). % adjusted if necessary

A. + B. Full-time / fixed % Supporting documents: Mission letter Contract Time registration Proof of payment Payslip

C. 1 Flexible hours - monthly Calculation: calculation. hourly rate: Monthly gross employment costs / nb of hours per month per employment contract. attention to holiday allocation. record 100% working time. timesheet example on website Recalculation potentially each month!

C.2 Flexible hours - 1720h method Calculation:. latest annual employment cost / 1720h. Example timesheet on website (http://www.interregeurope.eu/aboutus/programmedocuments/) Regular updates necessary? Potentially one time calculation hourly rate!

C. Flexible hours Supporting documents Contract 100% Time registration Payslip Proof of payment Documen t showing calculatio n o f hourl y rate

Administration costs Flat rate of 15% of staff costs Includes: office rent, utilities, office supplies, general accounting etc. No administration costs under any other budget line No supporting evidence required! Programme manual section 7.2.2 & Delegated Regulation (EU) 481/2014, Article 5

Travel and accommodation Only for staff employed by a project partner Non-staff travel costs: external expertise budget line! Includes items such as travel, meals, accommodation, visa, daily allowances Compliance with national and/or institutional rules Programme manual section 7.2.3 & Delegated Regulation (EU) 481/2014, Article 6

External expertise Services needed outside the partner organisation, incl. travel & accommodation for stakeholder groups Public procurement! Programme manual section 7.2.4 & Delegated Regulation (EU) 481/2014, Article 6

Equipment Purchased, rented or leased by a partner, to achieve the objectives of the project Mainly office equipment for project management, not exceeding EUR 5,000-7,000 per project Only planned/pre-approved equipment eligible! Compliance with public procurement rules Programme manual section 7.2.5 & Delegated Regulation (EU) 481/2014, Article 7

Not eligible costs VAT if recoverable by whatever means In-kind contributions Fines, financial penalties, expenditure on legal disputes and litigation, exchange rate fluctuation and interests on debt, Expenditure already supported by other subsidies Gadgets and gifts

Gifts and promotional items Gifts and promotional items (gadgets) are not eligible unless approved ex-ante by the programme (application form & during project implementation) needed for a specific communication activity (EU logo/project logo does not automatically make a gift a promotional material) Programme manual sections 7.4.9 and 8.2.1 & Delegated Regulation (EU) 481/2014, Article 2

Gifts and promotional items - - - - BAD Bottle of wine Souvenirs Book voucher Box of chocolate Gifts Promotion & communication material GOOD - Project banner - Good practice guide BAD, unless pre-approved by programme! e.g. - USB sticks - Pens - Notebooks - Bags

Items requiring pre-approval Prior approval from JS necessary for items not already specified and approved in the application form, e.g. Activities/travel outside the programme area

Items requiring pre-approval Equipment if not planned at application stage

4. POINTS OF ATTENTION 109

Points of attention Financing of joint activities Public procurement Financial corrections Fraud detection and reporting Quality checks/ audits Lessons learnt

Financing of joint activities No shared costs! Share activities, not costs! Contracting partner principle applies Contracting partner = the only one reporting and receiving the ERDF!

Public procurement Public procurement applicable rules* the EU public procurement directives (Directive 2014/24/EU) national rules internal rules of the partner organization No programme-specific rules Section 7.4.6 Public procurement of the programme manual * The strictest rules must always be applied in case of doubts, check with your procurement department

Public procurement The private non-profit bodies should respect national rules and internal partner rules (if they exist), should be able to demonstrate good use of public funds, in some countries need to comply with national public procurement rules. If not sure, contact your national point of contact!

Procurement and reporting List of contracts to be filled in by each partner (contracts below and above EU threshold) list of contracts in the partner report List of contracts subject to EU procurement directives (only above EU threshold) list of contracts in the joint PR (contracts automatically transferred from the partner reports)

Procurement and reporting FLC checks compliance with public procurement rules Documented in section 5 of the first level control report incl. checklist

Common procurement findings Inadequate procedure chosen (e.g. direct award of contract not justified) Insufficient publicity Value of the contract not estimated at institutional level Splitting the contracts to fit below thresholds Insufficient audit trail (e.g. missing documents)

Direct award of contract Common non-justified reasons: urgency the only one more economic no cost for training new person good value (based on old comparison) Direct award for these reasons is rarely justified Objective reasons needed (the market should prove)

Financial corrections Correction of an irregularity included in a previous progress report paid by the programme detected following: FLC checks (e.g. on-the-spot check) National checks Second level audits EC/ECA audits CA quality checks

Financial corrections Documented in a financial correction sheet Context of the corrections to be selected in the pre-defined list (e.g. following second level audit, on-the-spot check, national check, etc.) AN11 Correction done in the expenditure list

Diapositiva 119 AN11 What is meant by that? Aleksandra Niechajowicz; 09/06/2017

Definition of fraud Frau d Irregularity Intentional error /bad management Consequences: correction investigation & sanctions correction 120

Fraud detection and reporting Anti-fraud strategy Regulatory requirement for MAs to put in place effective and proportionate anti-fraud measures taking into account the risks identified (Article 125(4)(c) of Regulation (EU) No 1303/2013) implemented notably through: information of project and FLC on the main risks identified recommendations included in the programme manual FLC checklist taking into account risks identified procedures for the reporting of suspected fraud 121

Fraud risks identified Main risks identified for Interreg Europe programme: Staff costs reported do not correspond to the reality Public procurement (conflict of interests, favouritism, corruption) Double financing 122

Fraud prevention and detection To prevent and detect fraud, partners should: be aware of the potential risks of fraud have internal procedures in place to prevent and detect fraud See revised programme manual general info in section 7.8 recommendations for public procurement in section 7.4.6 123

Fraud prevention and detection To prevent and detect fraud, FLC should: be aware of the potential risks of fraud check the beneficiaries reports and supporting documents with appropriate skepticism (in particular when checking staff costs and public procurement) 124

Reporting suspected or established fraud How can the MA/JS be informed? whistleblowing procedure for general public/beneficiaries (dedicated email) https://www.interregeurope.eu/about-us/anti-fraud-policy/ specific reporting template for FLC Annex 4 of the programme manual 125

Quality checks/audits Several bodies to carry out quality checks/audits To detect errors and ensure proper use of funds Second Level Auditors 126

Time for questions 127

To conclude Don t be scared! Be prepared! 128

Video tutorials Finances Partner report: 13 video tutorials + 1 webinar recording FLC section: 8 video tutorials + 1 webinar recording Activities Reporting activities in joint PR: 4 video tutorials https://www.interregeurope.eu/projects/implement-aproject/ 129

Contact your LP in case of questions, the LP will contact the responsible policy and finance officers at the JS What s next? Online Q&A sessions on reporting for all project partners information on our website 130

European Union European Regional Development Fund Thank you! Questions welcome Interregeurope 131